Auswide Bank Ltd 1H FY24 Result Overview

Auswide Bank Ltd (ASX: $ABA) has reported its 1H FY24 results, with a decrease in Statutory NPAT to $7.663m and a conservative approach to lending to protect Net Interest Margin (NIM). The bank's loan book reduced by 2.1% to $4.310b, and the Net Interest Margin decreased from 177bps in 2H FY23 to 150bps in 1H FY24. Despite the challenging market conditions, the bank has retained low arrears levels at 0.14% of the loan book.

Executive Commentary on 1H FY24 Results

Market conditions during the first half of FY24 were challenging with intense competition for home loans and deposits, resulting in a 45.70% decrease in the bank's statutory Net Profit After Tax (NPAT) for the half-year ending 31 December 2023. The underlying NPAT of $6.618m was down 53.11% compared to the prior corresponding period. The bank took a conservative approach to growth, resulting in a relatively steady loan book, but competitive pressures led to a contraction in the net interest margin. However, the bank has signaled new growth aspirations for the second half of the financial year, with significant growth expected across Q3.

Summary of 1H FY24 Results and Outlook

Auswide Bank's 1H FY24 results reflect a decline in NPAT and loan book, attributed to the competitive lending and funding environment. The bank's conservative approach to lending aimed to protect the Net Interest Margin, resulting in a fully franked interim dividend of 11.0cps, down 11.0cps. Despite the challenges, the bank has signaled growth aspirations for the second half, with a predicted loan book growth exceeding $250m and projected growth of 5.80% across the second half. The bank also aims to focus on technology, cybersecurity, and customer engagement, while exploring opportunities for further growth in the loan book through M&A activities and partnerships.